Things You Should Know While Taking Loan Against Car
No matter how settled people are in theircareers, there comes a time when they all need financial assistance in some form or another. This assistance, availed in the form of a loan, can be used to meet both the urgent andlong-termexpenses. If you have been thinking about taking a loan and wondering whether or not you can get a loan against car, then you must read this post.
What is a loan against used car?
In simple terms, this can be understood as a financial instrument in which theborrowers pledgetheirused vehicle as an asset to secure the funds from a lender. A loan against used car is a feasible option for borrowers as it often comes with quick disbursal, lower rates of interest and a moderate loan amount.
While the concept of taking a loan against used car is not new to India, it has been gaining considerable traction in the past few years. It is mainly due to the fact that more people own personal vehicles these days, and are willing to pledge it as an asset to obtain a loan.
Many lenders offer this type of loan. While the interest rates mayvary, there are some aspects which are common between them. They are –
- Instant disbursal of funds
- Competitive and low rates of interest
- Funds available upto 150% value of the car
- Friendly application process and flexible repayment plans via EMIs
Eligibility to apply for a loan against used car
Now that you have a better understanding of a loan against car, let us understand the common eligibility criteria that stand with most lenders in the market –
- The borrower should bebetween 21 to 60 years of age while applying for the loan.
- The used vehicle should be less than 10 years old and under the name of the borrower.
- Both salaried and self-employed professionals can apply for the loan.
- The borrower needs to have a modest monthly income (exact figures may vary) to pay off the EMIs on time.
Once you fulfil the eligibility requirements for taking a loan against used car, you must submit the following documents to get your application approved:
- Proof of Age: Voter ID Card or Aadhar Card
- Proof of Identity: PAN Card or Aadhar Card
- Proof of Income: Salary slips or ITR Returns
- Proof of Address: Electricity Bill,Rental Agreement, Voter ID Card or Aadhar Card
While the exact list of documents may vary from one lender to another, most lenders will ask for the above-mentioned documents.
Things to keep in mind
Although the process of getting a loan against used car has become increasingly easy, mentioned below are a few important things you need to consider –
- If you want to get your loan application approved quickly, make sure that you have a decent credit score. Most lenders will prefer a credit rating of around 750 to 800 on a scale of 900, along with a good repayment history. For example, if you have taken a loan in the past and made timely payments of your EMIs for at least the last ninemonths continuously, then chances are that your loan application will get approved quickly.
- In order to prove to the lender that you have a decent income to pay back your loan on time, make sure that you have your latest ITR returns with you. If you are a salaried employee, you can ask your employer to provide you with salary slips, and if you are self-employed, then have your latest six months statements along with the ITR return of the last three years.
- The loan amount sanctioned will depend on the lender of your choice. While some lenders offer only 50% of the car value, there are a few who offer upto 150% of your car value. However, you need to keep in mind that if you want your loan application to be approved, the used vehicle needs to be less than 10 years old and under your name.
- If you want a pre-approved loan offer or want your application to get approved quickly, you can approach financial institution where you have had a salary account or current account for a long time. Since the lender already hasa relationship with you, the chances of your loan application getting approved quickly increases.
Getting a loan against car is a great way to gather funds. Now that you know how to apply for a loan against car, go ahead and choose a lender of your choice, and get the funds you require in your account in no time. This loan can be availed at a fast pace and at a relatively cheaper interest rate.